Employment growth by education attainment

The Georgetown University Center on Education and the Workforce is a constant source of outstanding analysis on the relationship between education attainment and employment and wages. Their new reportAmerica’s Divided Recovery is worth reading.

The report analyzes changes in employment by education attainment from just before the onset of the Great Recession (December 2007) to today (January 2016) overall, by industry, and by occupation. The bottom line: a preponderance of net new jobs have gone to those with a four year degree or more. The specifics:

For those with a high school degree or less employment has declined by 5,531,000

For those with some college or an associates degree employment has increased by 1,337,000

For those with a bachelors degree employment has increased by 4,590,000

For those with a masters degree or higher employment has increased by 4,021,000

The economy has added 4,417,000 jobs since December 2007. Employment for those with a four year degree or more increased by 8,611,000. Despite all the rhetoric to the contrary, the demand for those with a four year degree or more far exceeds that of those with some college or an associates degree. With employment increases about 6.5 times higher since the onset of the Great Recession.

Some believe that the post Great Recession economy has changed fundamentally. It hasn’t. The trends were the same during the decline as during the expansion. With those with a four year degree or more doing far better than those without.

From December to 2007 to January 2010 the economy lost 7.7 million jobs. But for those with a four year degree or more employment actually increased by nearly 200,000. From January 2010 to January 2016 the economy has added 11.6 million jobs. Of those 8.4 million (72 percent) went to those with a four year degree or more.

As the report makes clear these trends go back at least to the early 1980s.The reason for this powerful trend––as Michigan Future has been chronicling for more than two decades––is that the American economy is becoming more knowledge based. We are moving from a factory-based to a knowledge-based economy. As the report states:

Since the 1980s, the shift in employment has favored professional service industries, which have relatively higher concentrations of workers with postsecondary education and training, at the expense of traditional factory jobs. With the advent of the postindustrial service economy, job losses were no longer temporary, especially for high school educated production workers. These structural changes were turbocharged in the increasingly Darwinian world of recessions and recoveries, especially since the early 1990s. Those who lost jobs were less likely to be re-hired by the same employer, the same industry, or even in the same occupation. Overall job security declined, especially for high school-educated production workers.

If you check out the report, you will see the changes both by occupation and by industry since 2007 of an economy that is undergoing big structural changes. With professional and managerial occupations and knowledge-based services growing. While manufacturing, construction, and office and administrative support occupations suffering precipitous job losses since the onset of the Great Recession. Those three occupational clusters lost 4.8 million jobs since the onset of the Great Recession while overall the economy was adding 4.4 million jobs. The manufacturing and construction industries since the onset of the Great Recession saw employment declines of 2.6 million.

These structural changes have led to an economy where for the first time ever those with a four year degree or more comprise a larger share of those employed than those with a high school degree or less. 36 percent (up four percentage points from 2007) compared to 34 percent (down five percentage points from 2007). Also noteworthy is that workers with a four year degree or more now earn 57 percent of all wages.

The new reality is that the core of the American middle class is now––and almost certainly will be even more so in the future––those with a four year degree or more. The professional and managerial jobs (both STEM and non STEM) where most of them work are the only occupational clusters which are both growing and pay higher wages.

Lou Glazer is President and co-founder of Michigan Future, Inc., a non-partisan, non-profit organization. Michigan Future’s mission is to be a source of new ideas on how Michigan can succeed as a world class community in a knowledge-driven economy. Its work is funded by Michigan foundations.